David Jessop, Contributor

Confidence, mutual trust and shared ambition are three of the vital signs that a trade negotiation has to have if there is to be a successful outcome.

They go hand in hand with the political will to deliver whatever is agreed.

For much of the time during the most recent Ministerial round of negotiations for a Caribbean, Economic Partnership Agreement (EPA) all three were missing.

For a day and a half on November 29 and 30, Caribbean ministers met with Europe's Trade Commissioner Peter Mandelson to review progress on the just ended third phase of the negotiations.

Their encounter followed two days of technical negotiations led by principal negotiators for the Caribbean and the European Commission.

Free trade agreements

For those who do not yet know - using the measure of a private sector conference I have just returned from in Miami this number is still astonishingly high - the Caribbean EPA is one of six development-oriented asymmetrical free trade agreements that Europe is negotiating with the regions of the African Caribbean and Pacific group of states.

These have to be completed by December 2007 when the WTO waiver on the preferential trade arrangements in the Cotonou Convention expires.

The negotiation for an EPA is the only substantive trade negotiation that the Caribbean is involved in: the Free Trade Area of the Americas process and the WTO's Doha Round both having stalled.

What this means is that the EPA is requiring the Caribbean to have to determine by an externally imposed deadline, issues central to the regions future economic configuration.

For this reason, many key issues of principle are arising in the EPA negotiation that require inter-regional agreement before they can be negotiated within the framework of a treaty with Europe.

While it is arguable that it is better that this process is taking place with Europe since an EPA is likely to have accompanying funds to ease the consequent with the problem of integration and adjustment, it still seems little understood among European negotiators how much they are asking of a region with relatively low technical capacity, uneven levels of development and a far from mature economic integration process.

So what happened in Brussels?

Personality clashes apart, the Ministerial meeting, which was characterised by one senior Caribbean official as 'the worst I have ever been to', was by the end of the first day close to collapse. Despite this, after an evening Caribbean caucus, with tensions eased by a prior national day celebration, the remaining half-day meeting with European officials enabled the two sides to agree what was needed for the fourth phase of the negotiations.

Reconcile texts

This phase is intended to reconcile texts with the objective of completing by July 2007 the negotiation so that all of the necessary legal and technical arrangement can be achieved by December of next year.

This will be far from easy as many matters of principal remain unresolved.

If there is to be an EPA covering substantially all trade in goods and services between Europe and the region, it was recognised in Brussels that four major negotiating challenges have to be overcome.

These are: achieving a joint position on the nature of the commitments that will be made within an EPA by Caribbean nations either individually or at a regional level (itself an inter-regional issue with far reaching implications); agreement on the method and level of tariff reductions on goods; the negotiation of commitments for trade in services and investment; and the design and method of delivery of development cooperation to support EPA implementation.

At the heart of the whole difficult debate on each of these issues has been the need for Europe to recognise that the political reality of the region and that its multiple sovereignties and economic imbalances will require an agreement that is highly flexible.

By the end of the Brussels meeting it had been accepted that commitments in an EPA while going as far as possible on a regional basis may have to be national in application. In this context it was agreed that the negotiating teams from the CRNM and the EC would aim to achieve a consensus, especially on the modalities for market access negotiations.

On services and investment, it was agreed that text should be drafted early in 2007 that aimed to offer new business opportunities to the businesses of CARICOM and the Dominican Republic (Cariforum). The two sides also concurred that there was a need to define a prioritised package of development cooperation activities.

Implications

The implications of this very brief and vastly over simplified summary are substantial and need to be well understood by every business in the Caribbean.

This is most especially the case when it comes to tariff reductions where Cariforum is proposing that there would be a common exclusion list; 15 national schedules of items bound at zero duty at the beginning of the liberalisation process; and a list of products subject to the phased reduction of duties following an agreed standstill period.

If the Brussels meeting had any value it was to make the EC and Caribbean ministers realise how difficult it would be to deliver a Caribbean development and trade agreement.

Speaking about the meeting afterwards, one Caribbean minister noted that much now depended on the political will of both sides to deliver an agreement. It was also now up to the Caribbean to try to develop a better working relationship with Commissioner Mandelson while having EU member states understand the difficulties associated with trying to negotiate with an economically fragmented region.

The minister hoped that the commissioner would recognise that in the case of the Caribbean, agreement was not a matter of presentation.

The benefits for both sides were far more in the long term than the present. He also noted that there was a need for Europe as a whole to understand the difficulties that a region of fifteen very different states faced in trying to agree amongst themselves an EPA.

In saying so he fully recognised that much was now up to him and his colleagues to find new ways to ensure understanding so that future high level encounters might lead to a convergence and be less confrontational.

David Jessop is director of the Caribbean Council. Email: david.jessop@caribbean-council.org.